This Saturday, I attended an event in Lake Elmo, MN where hundreds of local residents came out in support of a very successful and profitable dealership, Fury Chrysler Dodge. Fury is one of the largest employers in Lake Elmo, as well as one of the most profitable Chrysler dealerships in the metro market. Yet Chrysler, under the direction of the Obama Auto Task Force, is calling for its closure in an attempt to reduce its inventory nationwide by 25 percent.
This simply makes no sense. Businesses and consumers should dictate decisions like this, not federal bureaucrats with no expertise in the auto industry.
And, that’s not the only leap into Wonderland that the Obama Auto Task Force has taken. In restructuring the auto companies, they also turned basic American legal principles upside down. For instance, let’s examine how the Car Czar leapfrogged the unsecured debts of the United Auto Workers ahead of secured debts of legitimate bondholders. Last week, teachers and police officers in Indiana filed to have their claims heard in federal district court in an attempt to protect their pension funds, which had been decimated despite their status as senior secured lenders to Chrysler.
According to Global Pensions, "The Indiana pension funds are holders of Chrysler’s secured debt. The Teachers’ pension fund holds $32.4 million in Chrysler debt and the Police pension fund holds $1.3 million."
Opposing the bizarre and questionable actions of the Obama Task Force, Indiana Treasurer Richard Mourdock rightly said:
“As fiduciaries, we can’t allow our retired police officers and teachers to be ripped off by the federal government. The Indiana state funds suffered losses when the Obama administration overturned more than 100 years of established law by redefining ‘secured creditors’ to mean something less.”
The deal crafted by the Obama White House tramples on the rights of pension fund creditors by giving a bigger share of the pie to more junior, non-secured parties - like the United Auto Workers.
What an ugly precedent we've set.
An opinion piece from the Wall Street Journal today does an excellent job summing up the federal government's power grab while detailing what lies ahead for the industry and its owners - you and me, now that we own 60% of GM. Give it a read: The Obama Motor Co.
"Mr. Obama likes to say he's a pragmatist who only prefers a government solution when it will work. But in resurrecting an industrial auto policy that even the French long ago abandoned, the President has made himself GM's de facto CEO. Our guess is that he'll come to regret it as much as taxpayers will."
I couldn't agree more.